The 20th quarterly

report on Bitcoin, crypto-assets, and blockchain

Presented by the Digital Gold Institute

2023Q4 edition - January 11, 2024

Digital Gold Institute’s activities

Reports and academic research, with a focus on the Crypto Asset Lab (CAL).

Consulting

Empowering professional expertise in Bitcoin, crypto, and blockchain.

Advanced education programs on Bitcoin and blockchain technology.

We write code. Check out our OpenTimestamps calendar and btclib.

Research

Training

Development

2

Ferdinando Ametrano

3

Bitcoin since 2014

20+ years of banking experience

Today’s roadmap

4

Market trends

Ecosystem

Regulation

Technology

Market trends

01

5

Bitcoin Performance

Bitcoin has surged in 2023 +155%, outperforming traditional asset classes.

In the last 3 months, Bitcoin's performance was strong, with a +56% increase in value.

6

2023 Bitcoin performance

Last 3 months Bitcoin performance

Bitcoin Quarterly Performances

7

Bitcoin Halving Performance

8

An Asset Class Like no Other

• Bitcoin's volatility has dropped from above 70% to under 50%, aligned with best performing stocks of the last 10 years: Tesla, Netflix, Apple, and Amazon.
• Bitcoin's correlations with other asset classes is well below 50%, indicating significant diversification potential.

9

Volatility comparison between BTC and the best performing stocks of the last 10Y

Asset class correlation with Bitcoin

Gold/Nasdaq 1Y Correlation With Bitcoin

10

Bitcoin’s Dominance

• Bitcoin's reputation as a digital store of value sets it apart in terms of performance.
• Its established status has led to extensive adoption and liquidity in global markets.
• Bitcoin dominates trading volume, accounting for 62% of overall crypto trading (stablecoins excluded).

11

Average trading %

Trading volume Q4 2023 (in Billions USD)

Institutional adoption is growing

12

…and more

A rapidly evolving landscape

According to Citi, 74% of financial institutions are involved in digital assets or DLT technology, a growth of 47% compared to the previous year.

Initially skeptical, banks are now actively exploring the world of digital assets. This process includes the offering of custody and investment services, research and development, industrial partnerships and acquisitions.

CME Listed Futures

13

Bitcoin Futures debuted in 2017, since then CME has always been the institutional reference market, now it is becoming also the most relevant. Recent monthly volume is about $80 billion.

CME Listed Options

14

Bitcoin options made their debut in January 2021 and experienced a steady increase in volume, reaching 3 billion monthly in December. This surge in trading activity reflects a growing interest and engagement from investors in utilizing options to navigate the dynamic cryptocurrency market.

Performance Altcoins vs Bitcoin (YTD)

15

Altcoins Correlation With Bitcoin

16

Correlations among crypto-assets are high: no significant diversification, no good reason to go beyond BTC and ETH

Ecosystem

02

17

Stablecoins

PayPal's introduction of PYUSD, a stablecoin backed by the U.S. dollar, makes it the first major U.S. financial player in the stablecoin arena.

Meanwhile, Tether has confirmed its leadership. It also had a surge in stablecoin loans, contrary to its earlier plans to decrease such activity.

Unfortunately, USDC lost ground because of the temporary depegging during the Silicon Valley Bank crisis.

18

Crypto Legal Updates and Worries

Digital Currency Group (DCG) has requested the dismissal of the lawsuit filed by Gemini, claiming that it is a defamatory campaign.

Co-founders of Tornado Cash accused of money laundering, sanctions violations, and operating an unauthorized business.

Binance has faced ongoing scrutiny from the U.S. Securities and Exchange Commission (SEC) due to concerns about its operations.

19

20

21

Regulation

03

22

The U.S. Perspective

The SEC has taken enforcement actions against certain cryptocurrency projects, despite judges not ruling in favor of the SEC in recent cases.

US lawmakers have written to SEC Chairman Gary Gensler, urging immediate approval of Bitcoin Spot ETFs.

23

— Larry Fink

CEO of BlackRock

“Let’s be clear, bitcoin is an international asset, it’s not based on any one currency and so it can represent an asset that people can play as an alternative.”

24

The Bitcoin ETF Approval

The U.S. Securities and Exchange Commission (SEC) has approved 11 spot bitcoin exchange-traded funds (ETFs) for listing and trading on U.S. stock exchanges.

In a historic move after years of anticipation and regulatory hurdles, the approved spot bitcoin ETFs are expected to start trading Thursday on NYSE Arca, Nasdaq, and Cboe BZX Exchange.

25

The European Perspective

MiCA has received approval in 2023 and is scheduled to take effect in mid-2024.

This marks a substantial milestone in the EU's crypto regulation efforts, providing a comprehensive regulatory framework for crypto companies operating in Europe.

26

Digital Euro is Coming…

27

• Digital access to Central Bank currency, inherently more reliable than the private electronic currency typical of current accounts and debit/credit cards
• Competition with debit/credit cards and bank deposits
• Reduction of dependence on non-European payment networks
• Distribution through intermediaries, not directly from the ECB
• Remuneration and costs, as well as interest rates and the possibility of forced withdrawals, still to be clarified
• Technology not yet defined, probably not blockchain
• Still awaiting approval from the European Union

…But It Has to Address Various Challenges

28

• Adoption and user experience to be verified: the public does not feel the need for it, does not understand its utility, expects it to be cost-free and easy to use.
• Privacy is the primary concern for 43% of participants in the public consultation conducted by the ECB in April 2021.

It will compete with stablecoins, but no real impact on Bitcoin and cryptocurrencies, which remain primarily investment assets and are experiencing a strong market demand.

Technology

04

29

Bitcoin’s Unprecedented Computational Power

Bitcoin hash rate has reached new historic highs, underlining its network's security and scalability.

The stable growth highlights Bitcoin's resilience and potential for a thriving future.

30

Mining hash rate (tera hash per second)

Ethereum's Shapella upgrade was technically successful but has fallen short of market expectations

Despite the transition from proof-of-work (PoW) to proof-of-stake (PoS), reducing energy consumption by 99%, Ethereum has not met price growth expectations.

Ether has hit its lowest value compared to Bitcoin in the past 14 months.

31

Key takeaways

1. Clear regulation has been instrumental in driving Bitcoin's remarkable growth in 2023

​

• Substantial regulatory advancements and ETFs are providing clarity, boosting investor confidence

​

• Bitcoin has demonstrated robust technological resilience and continues to function securely and efficiently